MILAN — Safilo Group SpA Tuesday reported a net loss of 47.1 million euros last year, compared with a net profit of 15.4 million euros in 2016, due to the lingering effects of the loss of its lucrative Gucci license and delivery delays caused by its new order-to-cash IT system in its Padua, Italy warehouse.
The group’s net loss, as well as its earnings before interest and taxes and earnings before interest, taxes, depreciation and amortization figures, were adjusted to exclude an 192 million euro impairment charge on the goodwill allocated to the group’s cash generating units, as well as nonrecurring costs of 15.3 million euros related to the reorganization of the Ormuz plant in Slovenia and cost-saving and restructuring initiatives. The group’s unadjusted net loss totaled 251.6 million euros in 2017 compared to a 142.1 million euros in 2016.
During the company conference call, Safilo management assured analysts that the Padua plant complications have since been remedied and it has been running normally since the start of 2018. Orders from the first quarter are also showing signs of improvement.
“We expect 2018 to be flattish or slightly positive. We don’t expect it to be a big year of cash generation, but we certainly don’t expect things to erode any further,” said chief financial officer Gerd Graehsler, who also cited the euro’s strength against the dollar as a headwind the group will encounter into the rest of the year.
The Gucci license ended in December 2016, two years earlier than planned. Safilo has continued to work with Gucci under a supply agreement.
The company confirmed preliminary sales released in January and said sales decreased 16.4 percent to 1.05 billion euros last year, compared with 1.25 billion euros in 2016.
In geographic terms, the company reported negative performance across the board. In 2017, Safilo sales fell a steep 43.9 percent in Asia-Pacific, which represents more than 6 percent of total group turnover. Sales in North America, which represents more than 40 percent of group turnover, decreased 17.1 percent, the company said. Europe — the group’s largest market, representing just shy of 45 percent of total turnover — reported a drop of 12.7 percent, while Rest of World sales decreased 0.2 percent.
The group’s adjusted EBIT equaled a loss of 800,000 euros, compared to 43.5 million for 2016.
Safilo produces and distributes eyewear under licenses for brands including Fendi, Dior and Jimmy Choo, as well as house brands Carrera, Polaroid and Safilo. Its brand portfolio includes Moschino, Marc Jacobs, Givenchy and Elie Saab, Havaianas, Rag & Bone, Max Mara and Smith, a contemporary sporty line of eyewear.
During the company conference call, Safilo management said they were impressed by the turnaround in Spain and France in the first quarter.
“[This year] needs to be a brand-new start so we can recover sales growth…and increase profitability and take advantage of new markets…and new trends,” Graehsler said.
In addition to a string of changes, delays and license issues, Safilo’s chief executive officer Luisa Delgado retired. The group will welcome its new ceo Angelo Trocchia, a former Unilever executive, in April.